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Legalized marijuana may be slow to produce much tax money for Oregon, legislative analysts say

washingtonpotbuyer.jpg

Cale Holdsworth of Abeline, Kansas, holds up his purchase after being the first in line to buy marijuana Bellingham, Wash. on July 8, the first day to legally purchase the drug for recreational use in the state.
(AP Photo/Ted S. Warren)

The Oregon Legislature's tax experts aren't as bullish about how much the state will pick up in revenue from legal marijuana as is an economic firm hired by legalization proponents.

The Legislative Revenue Office this week estimated that the first full year of legal sales would produce $16 million in tax revenue. In contrast, a Portland-based economics firm hired by backers of the November ballot measure to legalize marijuana estimated that the state would collect $38.5 million in the first year.

Paul Warner, who heads the revenue office, said both estimates carry a great deal of uncertainty because it's difficult to know how many marijuana users there are in Oregon and how many would shift to buying the drug from legal retailers.

The legislative tax experts said they didn't think there would be as many out-of-state buyers coming to Oregon to buy marijuana as estimated by ECONorthwest, which was hired by proponents. And the legislative experts also didn't think there would be an initial price drop in the legal market that would help stimulate sales.

The legislative office also estimated that 67 percent of users would continue to buy their drug on the black market. ECONorthwest estimated that 60 percent would stick with the black market.

Eventually, Warner said, more of a legal market will develop and tax revenue will rise. "We're more cautious [than ECONorthwest] because we think it will take a while to happen," said Warner.

Both estimates look at sales in the fiscal year beginning in July of 2016. The legislative experts estimated that the Oregon Liquor Control Commission would spend about $7 million in the first year on regulatory costs, reducing the net revenue to $9 million. The ECONorthwest report did not estimate costs.

The Legislative Revenue Office produced the estimate for a committee preparing financial estimates for the November ballot measures. A public hearing will be held at 1 p.m. Wednesday in the state Capitol to gather comment on what should be included in explanatory and financial statements for each of the seven measures on the ballot.

Warner said his office will produce a more detailed report on the economic impact of legalizing marijuana before the election.